If the Shoe Fits: Cashing Out

If the Shoe Fits: Cashing Out

Post from: MAPpingCompanySuccess

A Friday series exploring Startups and the people who make them go. Read all If the Shoe Fits posts here

5726760809_bf0bf0f558_mWho should make money when you finally cash out?

Most commentary I see talks about what investors and founders walk away with, but what about the rest of the team?

In an interview, Steve Blank addresses this in terms of the impact on valuation and cashing out after a large investment and how it affects what founders receive, but not its effect on the team.

If the founders walk away with a few million each after the investors take their 3-5X return, what will be left for your people?

Those are the people who made the company successful enough to be bought in the first place.

Most of you will agree that the great majority of startups will not have exits similar to Facebook or Google.

Knowing that, it is your responsibility to honor the social contract you made with your employees, when they traded their compensation for equity in your startup.

Therefore, it is of paramount importance for founders to never lose sight of the numbers; the more investment you take the lower your team’s return when the company is acquired.

Image credit: HikingArtist

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